Thanks in large part to the cost of keeping the coal-fired NRG Indian River Power plant open, the city of Milford is raising electric rates.
The rate hike will impact all electric customers and will result in a 6.2% increase in electric bills for the average household and small business accounts in Milford.
This power cost increase is largely due to a decision by grid operator PJM to subsidize the coal-fired plant in Millsboro, after the owner announced a 2022 shutdown.
PJM cited the need to strengthen the grid prior to the shutdown to ensure the reliability of the grid.
The power plant is no longer competitive in bidding for electric power.
The Indian River site is also likely to in plans to feed power from offshore wind turbines to the grid.
Natural gas prices have risen sharply, but utilities lock in lower longer-term rates to minimize price spikes.
Commercial accounts in Milford can expect an increase ranging from about 5.9 to 7.9% depending on demand, load factors, and time of use.
The City of Milford is a member of Delaware Municipal Electric Corporation (DEMEC), which is increasing rates to towns and cities that, in addition to Milford, include Dover, Middletown, and Newark.
Customers will see the increase in their November Milford utility bills. Even with the increase, customers are paying less than they did were five years ago, a release from the City of Milford stated.
Milford’s overall electric rate continues to be the third lowest municipal rate in the state of Delaware, trailing only the City of Lewes and the City of New Castle, city reported.
The rate hikes will put pressure on property taxes in towns and cities since surpluses from municipal utilities are used to hold down property taxes.
“DEMEC exercises every strategy at its disposal to reduce and stabilize power costs, improve power supply diversity, and mitigate the impact of ancillary costs in power markets on behalf of its members, including the City of Milford,” finance director Lou Vitola said, “but reliability requirements driven by grid operator PJM and supported by Federal Energy Regulatory Commission (FERC) regulations carry with them unforeseen cost impacts that are not associated with day-to-day power delivery, but which nonetheless flow to end users of electricity.”
According to the city release, reducing household energy consumption by 2.2 kWh per day will completely offset the rate adjustment.
Milford, located in Kent and Sussex counties, is home to an estimated 12,000 residents as well as hundreds of businesses and organizations.
It’s one of the fastest-growing cities in the state, thanks to an influx of retirees and empty nesters.
